Mortgage fees, everything you need to know!

When buying a house there can be a few fees to consider and look out for. Some can be avoided or reduced but some cannot and some that you have no idea what they are or if you should be paying them at all. So we created a list of fees you should look for and what they are, and if you need to pay them or not. 

 

Some mortgages have arrangement fees for setting them up. This fee can either be paid upfront or you can add it to your mortgage. You should bear in mind any fees you add to your mortgage will incur interest. Mortgages with an arrangement fee often have a lower interest rate, so depending on the size of your mortgage this may be a more cost effective option for you. This fee can be avoided by opting for a mortgage without a fee. 

 

All lenders want to value your property to ensure it is worth what you are paying for it. Most lenders offer this service for free as an incentive to use them, but some lenders have this as an extra charge. This can range from £100 to £500 depending on the mortgage type and the lender. This is always paid upfront at the time your application goes in. Again this can be avoided or reduced by opting for a lender and a mortgage product that doesn’t have a fee or a smaller fee. 

 

Unfortunately this fee cannot be avoided! This fee/tax is payable on completion of a property purchase and is paid to your solicitor. The amount of tax payable is determined by the value of the property you are buying. It is only paid on transactions (a buyer from a seller) not for remortgages. There are thresholds for the amount of tax payable and allowances for first time buyers. To find out how much tax you would pay check the stamp duty calculator online. 

 

If you have a fixed rate mortgage and pay that mortgage back early by remortgaging before your fixed rate comes to an end or you sell your property in that time frame, you will incur an early repayment charge. This is a penalty put in place by lenders on their mortgage products to deter you leaving early. The rate of charge will vary depending how long you have fixed your rate for and how much you have borrowed. Typically the charge is a % of how much you have borrowed. For example if you have a 2 year fixed rate on a £100,000 mortgage and you leave your mortgage in the first year, you will be charged 2% of £100,000 which would be a charge of £2,000. 

 

Often referred to as an admin fee. This fee is associated with mortgage applications. If some lenders don’t charge an arrangement fee they can sometimes charge a booking fee which is often paid upon application. 

 

All property purchases and remortgages require legal help. This is because the legal ownership of a property changes hands and the land registry needs updating whenever a new lender provides a mortgage on a property. This fee can vary depending on which solicitor you use and the amount of work involved. For example limited company buy to let mortgages require more work to be carried out as companies house is involved, or the removing of a party from a mortgage with require additional work to be carried out by the solicitor. This fee can be reduced by shopping around solicitors to obtain a quote and choosing the most competitive. 

 

In majority of property sales an estate agent will act of behalf of the person selling the property. The will market the property, handle viewings and draw up the sale paperwork. They charge the seller a fee for doing all of this which can either be a flat fee or a 5 of the property sale price. This is paid by the seller on completion and taken from the proceeds of the sale or can be paid separately if the seller chooses. The cost of this will vary depending on which agent you choose to use and their fee structure eg flat fee or %. 

 

You may decide to use a professional moving company help you move house or you may choose to rent a van to help you move your furniture to your new home. Either way this is a cost that should be factored into your moving costs budget. 

 

As akways, consult an independent mortgage adviser to help you with your mortgage and explain all of these in more detail and how you can find the best deal for you 

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